Rio boss attacks role of unions

Date: November 13 2012

Greg Roberts

Rio Tinto has called for unions to get out of the workplace, blaming them for falling productivity, as some of its coal workers planned to go on strike.

The global mining giant's Australian head said the nation had to address urgently the soaring capital costs and taxes for mining projects that had far surpassed the rest of the world, while the industry's productivity had plummeted.

For miners to be competitive, productivity had to rise faster than wages, Rio Tinto Australia managing director David Peever said.

He described the issue of unions as an "elephant in the room".

"Reform of the Fair Work Act needs to go much further than has so far been flagged by the government," Mr Peever told a mining conference in Perth.

"Direct engagement between companies and employees, flexibility and the need for improved productivity has to be at the heart of the system.

"Only then can productivity and innovation be liberated from the shop floor up, and without the competing agenda of a third party constantly seeking to extend its reach into areas best left to management."

The comments came as mine workers announced they would strike in the weeks before the Blair Athol coal mine in Queensland closed.

Mineworkers being made redundant by the closure of the Blair Athol mine will strike for 36 hours next week, saying the company discriminates against union members.

The Construction Forestry Mining and Energy Union (CFMEU) spokesman Glenn Power said Rio Tinto was paying union members lower redundancies than those on individual agreements, highlighting a discriminatory anti-union agenda.

Mr Peever blamed the government for taking its eye off the productivity ball, which had been steadily declining for a decade.

He cited Productivity Commission chairman Gary Banks' own recent anti-union comments that Australia had to start producing more per person to prosper in an ageing society because it could not rely on higher world prices for commodities anymore.

However, Dr David Gruen, head of Treasury's macro-economic forecasting unit, has blamed poor management practices for Australia's weak productivity.

Mr Peever said Australia might miss its chance to take full advantage of the "Asian Century", with more production in more challenging, frontier non-Organisation for Economic Co-operation and Development (OECD) countries.

Mr Peever conceded that perhaps federal Resources Minister Martin Ferguson was right that the industry had become "fat and lazy" in letting costs increase during the mining boom.

However Rio, the world's second biggest iron ore producer, would press ahead with plans to spend almost $16 billion to increase Pilbara iron ore production to 353 million tonnes a year by mid-2015.

"The Pilbara expansion ticks all the boxes. It's the very definition of a tier one asset, large, well positioned on the cost curve, high-returning for shareholders, expandable, timely and at an acceptable up-front capital cost," Mr Peever said.